Beauregard Claim with Unpatentable Method Steps Does Not Satisfy 35 U.S.C. 101

A Federal Circuit panel held on August 16, 2011 in Cybersource Corp. v. Retail Decisions, Inc., Fed. Cir., No. 2009-1358, 8/16/2011, that,

“A patent claim to a computer readable medium containing program instructions to carry out steps for detecting credit card fraud is not patent eligible under 35 U.S.C. 101.”

The Court reached this conclusion about the article of manufacture claim because the steps that would be carried out by the computer program are nothing more than an unpatentable method that can be performed entirely in the human mind or by a human using a pen and paper. Section 101 is not satisfied by a method process “standing alone and untied to another category of statutory subject matter even when  a practical application was claimed,” Judge Dyk explained, citing his opinion in In re Comiskey, 554 F.3d 967 (Fed. Cir. 2009). By the same token, the “Beauregard” claim (see In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995)) to the computer readable medium reciting the method steps that are unpatentable cannot stand, according to the appellate panel.

The Court also rejected the argument that the Beauregard claim, directed to a tangible, man-made article of manufacture, is per se outside of the Supreme Court categories excluded from patentable subject matter.  Judge Dyk discussed In re Abele, 684 F.2d 902 (CCPA 1982), which claimed an unpatentable “method for displaying data” and an “apparatus for displaying data” that performs out the steps of the unpatentable method.  Due to the broad and functionally-defined nature of the apparatus claim, according to Abele, treating the apparatus claim differently from the method claim would exalt form over substance.  The Abele Court required the applicant to demonstrate that the claims were “truly drawn to a specific apparatus distinct from other apparatuses capable of performing the identical functions,” Judge Dyk pointed out.

In this case, the Court concluded, Cyberspace failed to prove its article of manufacture claim is “truly drawn to a specific” computer readable medium, rather than to the underlying method of credit card fraud.  Acknowledging that a programmed general purpose computer creates a new machine under In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994), Judge Dyk added the following:

But we have never suggested that simply reciting the use of a computer to execute an algorithm that can be performed entirely in the human mind falls within the Alappat rule. Thus, despite its Beauregard claim format, under Abele, we treat claim 2 as a process claim for patent-eligibility purposes.

With respect to the method claim itself, the Court held that it does not involve machine operation and fails the transformation test in that it simply requires one to “obtain and compare intangible data pertinent to business risks.”  It rejected the argument that, because obtaining an Internet address would not be possible without the Internet, the method is necessarily tied to a machine.  Nothing in the claim requires the use of the Internet to obtain the address data. “Such a method that can be performed by human thought alone is merely an abstract idea and is not patent-eligible under §101,” Judge Dyk wrote.